Investing

Lloyds fined £91m for misleading insurance customers over renewals

Lloyds fined £91m for hitting insurance customers with loyalty penalties while claiming to offer ‘competitive’ renewal quotes

Lloyds Banking Group has been fined £91million by the City watchdog for misleading insurance customers.

The High Street lender sent out 9m letters to existing home insurance customers from 2009 to 2017, claiming to offer ‘competitive’ quotes for policy renewals.

However, at the same time it offered lower quotes to new customers for the same product – a practice branded by critics as ‘the loyalty penalty’.

Lloyds sent letters to existing home insurance customers claiming to offer ‘competitive’ quotes for policy renewals while offering lower quotes to new customers for the same product

The Financial Conduct Authority said Lloyds’ insurance arm had failed to check the accuracy of its messaging and ordered it to pay a £90.7million fine.

It is the second-biggest penalty ever handed out to a retail bank in the regulator’s history – and Lloyds again was on the receiving end, forced to pay £117million six years ago for mis-selling PPI. 

The FCA is cracking down on loyalty fees, where insurers charge higher rates for loyal customers through renewals compared with new customers. 

Rules coming into force in January will ban the practice.

The FCA also found that 500,000 Lloyds customers were told they would receive a discount based on ‘loyalty’ or being a ‘valued customer’ but this never materialised. 

The bank only changed this once the watchdog’s investigation was launched. 

Lloyds has since made voluntary payments of around £13.5million to customers who received the letters about a discount that was never applied.

A Lloyds spokesman said: ‘We’re sorry that we got this wrong. We’ve written and made payment to those customers affected by the discount issue.’

Advertisement

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button